Wealth Check: 'How can I save money for my son's university fees?'

Gina Musa works as a parent partnership co-ordinator for a local authority, giving support and information on education to parents of children with special needs.

Gina Musa works as a parent partnership co-ordinator for a local authority, giving support and information on education to parents of children with special needs.

Her son will be sitting GCSEs next year and wants to go to a performing arts school and possibly on to further education. Ms Musa wants to know how to invest the money from her maturing savings plan over the next three to four years, so it can go towards her son's college costs, and what she should do with her Barclays shares.

She also wants to know whether to move her pension monies into the local government schemes. She hopes to work in an area closer to her outside interests once her son is at college and would consider moving to a smaller property to finance this.

GINA MUSA, 48, PARENT PARTNERSHIP CO-ORDINATOR

Education: Teacher training; diploma in counselling

Salary: £25,000

Debt: Credit card paid off each month

Property: Five-year fixed mortgage at 5.59 per cent

Savings: Cash Isa (about £4,000). Savings policy of about £7,500 that matures in June; 111 Barclays shares.

Pension: Local government pension scheme since 1999. Pension from teaching and private pension.

Outgoings: Standing orders, about £800 a month; others, about £600 a month

We put her case to Patrick Connolly at John Scott & Partners, Vivienne Starkey at Equal Partners and Caroline Anstee of Fiona Price.

SAVINGS

Ms Musa will need access to the money from her savings plan quite soon, so a cash account is the only sensible option. Three to four years is too short of a timescale for investment in the markets.

Mr Connolly says that Ms Musa should first use up her cash Isa allowances (£3,000 in this tax year) and then get a competitive deposit account for the rest. He recommends Marks & Spencer (4.5 per cent) or Abbey's postal Isa (4.6 per cent) for the tax-free funds and ING Direct (4.41 per cent) for the balance.

Ms Starkey suggests Intelligent Finance for the Isa (4.6 per cent), as a savings bank with consistently competitive rates. She sounds a note of caution about accounts that offer introductory bonuses: they pay more up front but might not be competitive after the bonus rate ends.

SHARES

Given that Ms Musa has no other equity investments, her Barclays shares (worth about £500 at the moment) represent a relatively high-risk investment. Mr Connolly suggests that if Ms Musa does want to keep some exposure to the markets, a collective investment such as a unit or investment trust would suit her better. If that is too much risk, then she should sell the shares and put the money into a deposit account.

Ms Starkey points out that selling through a flat fee dealing service is the cheapest way to realise the capital.

PENSION

Ms Anstee points out that Ms Musa is in a fortunate position as a member of the local government pension scheme. Ms Musa might even want to use some of the money from her savings plan to top up her local government pension, as this will build up her entitlement and provide a cushion, should she go freelance. Transferring the private pension will depend on whether the local government scheme will accept it; there might be exit penalties. Ms Starkey says that the pension is likely to be an old-style scheme with quite high charges. An alternative might be to change to a stakeholder plan.

Consolidating her public-sector pensions should be easier, and she can add her years of service from teaching to her current arrangements. As long as her current salary is higher than her teaching salary, this is worth considering,

COLLEGE FEES

If Ms Musa's son does go on to higher education, he will have to pay university fees (£3,000 a year under the Government's proposed top-up fees). If Ms Musa does move to a cheaper house this will free up funds, but in the meantime, Ms Starkey says it is important to save as much as possible.

MORTGAGE AND PROPERTY

Ms Anstee suggests that Ms Musa might want to review her mortgage arrangements to see if a better deal is on offer. But she cautions that there might be penalties on her current, fixed-rate loan. Those penalties, Ms Starkey says, could outweigh any savings.

Although moving house will free up capital, Ms Starkey has an alternative suggestion. If there is space in the house when her son moves out, Ms Musa could consider letting a room. Under the Government's Rent a Room scheme, the first £4,250 of annual rent is tax free.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
PROMOTED VIDEO
Sport
Fans hold up a scarf at West Ham vs Liverpool
footballAfter Arsenal's clear victory, focus turns to West Ham vs Liverpool
New Articles
i100... she's just started school
News
news
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Sport
football
New Articles
i100... despite rising prices
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam